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Stipulation Of Settlement

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Sectors: Computer Software and Services
Governing Law: California , View California State Laws
Effective Date: November 26, 2003
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EXHIBIT 10.1


GOLD BENNETT CERA & SIDENER LLP PAUL F. BENNETT (State Bar No. 063318) STEVEN O. SIDENER (State Bar No. 121062) C. ANDREW DIRKSEN (State Bar No. 197378) 595 Market Street, Suite 2300 San Francisco, California 94105-2835 Telephone: (415) 777-2230 Facsimile: (415) 777-5189


MILBERG WEISS BERSHAD HYNES & LERACH LLP WILLIAM S. LERACH (State Bar No. 68581) 401 B Street, Suite 1700 1800 San Diego, California 92101 Telephone: (619) 231-1058 Facsimile: (619) 231-7423


-and-


REED R. KATHREIN (State Bar No. 139304) JOHN K. GRANT (State Bar No. 169813) SYLVIA WAHBA (State Bar No. 197612) 100 Pine Street, Suite 2600 San Francisco, California 94111 Telephone: (415) 288-4545 Facsimile: (415) 288-4534


Co-Lead Counsel for Plaintiffs


UNITED STATES DISTRICT COURT


NORTHERN DISTRICT OF CALIFORNIA


In re CBT GROUP PLC SECURITIES ) Master File No.: C-98-21014-RMW (RS) LITIGATION )
) ______________________________________)
) This Document Relates to: )
)
ALL ACTIONS )
)
) ______________________________________)


STIPULATION OF SETTLEMENT


This Stipulation of Settlement (the "Stipulation") is entered into as of November 7, 2003, between and among the following Settling Parties (as defined in Section IV, P. 1.24 below), by and through their respective counsel: (i) the Lead Plaintiffs, Roland King, Ann Peden, Gene Addington, Sunil Sethi, Jang Bhadhur Sethi, Naveen Seth, Sunita Uppal, Sukhdev Walia, Ed Fein, Michael Pickar, Stuart Greenebaum, Stephen Gott and Robert Elkas, on behalf of themselves and each of the Class Members (as defined in Section IV, P. 1.4 below); (ii) CBT Group PLC (n/k/a Skillsoft PLC), CBT Systems USA, Ltd. (collectively "CBT" or the "Company"); and (iii) William G. McCabe ("McCabe"), Gregory M. Priest ("Priest"), James J. Buckley ("Buckley"), Richard Y. Okumoto ("Okumoto") and John P. Hayes ("Hayes") (collectively, the "Individual Defendants"). The Stipulation is intended by the Settling Parties to fully, finally and forever resolve, discharge and settle the Released Claims (as defined in Section IV, P. 1.18 below), upon and subject to the terms and conditions hereof.


I. THE LITIGATION


Commencing in October 1998, actions were filed in the United States District Court for the Northern District of California (the "Court") as securities class actions on behalf of persons who purchased or otherwise acquired American Depositary Shares ("ADS" or "shares") issued by CBT during the period January 20, 1998 through October 1, 1998, inclusive (the "Class Period").


By Order dated February 16, 1999, these actions were consolidated for all purposes under the caption In re CBT Group PLC Securities Litigation, Master File No. C-98-21014-RMW (RS) (the "Litigation"), and the Court appointed Roland King, Ann Peden, Gene Addington, Sunil Sethi, Jang Bhadhur Sethi, Naveen Seth, Sunita Uppal, Sukhdev Walia, Ed Fein, Michael Pickar, Stuart Greenebaum, Stephen Gott and Robert Elkas as Lead Plaintiffs and the law firms of Gold Bennett Cera & Sidener LLP and Milberg Weiss Bershad Hynes & Lerach LLP as Co-Lead Counsel.


On July 16, 1999, the Court certified a Class and defined the Class in this Litigation to include persons and entities who purchased or acquired CBT shares, or warrants, options or other rights to acquire CBT shares, during the period January 20, 1998 through October 1, 1998, inclusive. The Class also includes a subclass consisting of all persons who acquired CBT's shares,


STIPULATION OF SETTLEMENT -1-


or warrants, options or other rights to acquire CBT shares in exchange for ForeFront common stock, or warrants, options or other rights to acquire ForeFront common stock in connection with the May 29, 1998 merger between CBT and ForeFront.


The operative complaint is the Second Amended and Consolidated Complaint (the "Complaint"), filed on February 5, 2001. The claims asserted in this action arise under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 ("the Exchange Act"), 15 U.S.C. Sections 78j(b) and 78t(a), Rule 10b-5 promulgated by the Securities and Exchange Commission ("SEC"), 17 C.F.R. Section 240.10b-5, and under Sections 11 and 12(2) and 15 of the Securities Act of 1933 (the "Securities Act"), 15 U.S.C. Sections 77k, 77l(2) and 77o.


The Complaint alleges that defendants issued materially false statements regarding CBT's financial condition and business prospects in a scheme to artificially inflate the value of CBT shares. The Complaint further alleges that the Lead Plaintiffs and other members of the Class purchased or otherwise acquired CBT securities during the Class Period at prices artificially inflated as a result of CBT's dissemination of materially false and misleading information.


Co-Lead Counsel have extensively investigated the alleged wrongdoing pertaining to each Defendant in the Litigation and the alleged damages suffered by the Class. Co-Lead Counsel reviewed thousands of documents produced by Defendants and various other non-parties. Co-Lead counsel has also interviewed numerous non-party witnesses and has taken numerous depositions of material fact witnesses to the Litigation. In addition, the parties have exchanged their respective expert reports and, at the time of the settlement, had deposed their respective accounting experts.


Co-Lead Counsel served interrogatories, document requests and requests for admissions upon Defendants; reviewed and analyzed Defendants' responses to these discovery requests; and reviewed and analyzed documents produced by Defendants and non-parties. Co-Lead Counsel also consulted extensively with experts retained to review and advise on the accounting issues in the case and the damages that Lead Plaintiffs would seek to prove at trial. Lead Plaintiffs and Co- Lead Counsel believe that the investigation and discovery described above provides an adequate basis for entering into this Stipulation.


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On November 7, 2003, the parties participated in an arm's-length settlement mediation before the Hon. Edward Infante (Ret.). At the November 7, 2003 mediation, the terms of this settlement were reached and counsel for the Lead Plaintiffs and counsel for the Defendants agreed to the terms of the settlement which forms the basis of this Stipulation.


II. DEFENDANTS' DENIALS OF WRONGDOING AND LIABILITY


The Defendants have denied and continue to deny each and all of the claims and contentions made by the Lead Plaintiffs in the Litigation. The Defendants expressly have denied and continue to deny all charges of wrongdoing or liability against them arising out of any of the conduct, statements, acts or omissions alleged, or that could have been alleged, in the Litigation. The Defendants also have denied and continue to deny, inter alia, the allegations that the Lead Plaintiffs or the Class have suffered damages, that the price of CBT securities was artificially inflated by reasons of alleged misrepresentations, non-disclosures or otherwise, or that the Lead Plaintiffs or the Class were harmed by the conduct alleged in the Litigation.


Nonetheless, the Defendants have concluded that further conduct of the Litigation would be protracted and expensive, and that it is desirable that the Litigation be fully and finally settled in the manner and upon the terms and conditions set forth in this Stipulation. The Defendants also have taken into account the uncertainty and risks inherent in any litigation, especially in complex cases like the Litigation. The Defendants have, therefore, determined that it is desirable and beneficial to them that the Litigation be settled in the manner and upon the terms and conditions set forth in this Stipulation.


III. CLAIMS OF THE LEAD PLAINTIFFS AND BENEFITS OF SETTLEMENT


The Lead Plaintiffs believe that the claims asserted in the Litigation have merit. However, Co-Lead Counsel for the Lead Plaintiffs recognize and acknowledge the expense and length of continued proceedings necessary to prosecute the Litigation against the Defendants through trial and through appeals. Co-Lead Counsel for the Lead Plaintiffs also have taken into account the uncertain outcome and the risk of any litigation, especially in complex actions such as the Litigation, as well as the difficulties and delays inherent in such litigation. Co-Lead Counsel for the Lead Plaintiffs are mindful of the inherent problems of proof under and possible defenses to


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the violations asserted in the Litigation and the fact that, in any litigation, there exists a possibility that the Class could receive nothing or less than the settlement amount, even if they were to prevail at trial. Further, continued litigation would reduce the limited amount of insurance available to satisfy any judgment. Co-Lead Counsel for the Lead Plaintiffs believe that the settlement set forth in this Stipulation confers substantial benefits upon the Class. Based on its evaluation, Co-Lead Counsel have determined that the settlement set forth in this Stipulation is in the best interest of Lead Plaintiffs and the Class.


IV. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT


NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and between the parties hereto, and by their undersigned counsel, that, subject to the approval of the Court, the Litigation, the Released Claims and all matters encompassed within the scope of any releases set forth or referenced herein, shall be finally and fully compromised, settled and released as to all Settling Parties, and the Litigation shall be dismissed with prejudice as to all Defendants, upon and subject to the terms and conditions of the Stipulation, as follows:


1. Definitions


As used in the Stipulation the following terms have the meanings specified below:


1.1 "Authorized Claimant" means any Class Member whose claim for recovery has been allowed pursuant to the terms of the Stipulation.


1.2 "Claimant" means any Class Member who files a Proof of Claim in such form and manner, and within such time, as the Court shall prescribe.


1.3 "Claims Administrator" means the firm of Gilardi & Co., LLC.


1.4 "Class" means a class consisting of all persons and entities who purchased or acquired CBT shares, or warrants, options or other rights to acquire CBT shares, during the period January 20, 1998 through October 1, 1998, inclusive. The Class shall include a subclass consisting of all persons who acquired CBT's shares, or warrants, options or other rights to acquire CBT shares in exchange for ForeFront common stock, or warrants, options or other rights to acquire ForeFront common stock, in connection with the May 29, 1998 merger between CBT and ForeFront. Excluded from the Class are Defendants, members of the immediate families


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of the Individual Defendants, any entity in which any Defendant has or had a controlling interest, directors and officers of CBT during the class period, and the legal representatives, heirs, successors or assigns of any such Defendant and any person who timely requested exclusion from the Class.


1.5 "Class Period" means the period commencing on January 20, 1998 through and including October 1, 1998.


1.6 "Class Member" or "Member of the Class" means a Person who falls within the definition of the Class as set forth in P. 1.4 of the Stipulation.


1.7 "Defendants" means CBT Group PLC (n/k/a Skillsoft PLC), CBT Systems USA, Ltd., William G. McCabe, Gregory M. Priest, James J. Buckley, Richard Y. Okumoto and John P. Hayes.


1.8 "Effective Date" means the first date by which all of the events and conditions specified in P. 7.1 of the Stipulation have been met and have occurred.


1.9 "Escrow Agent" means the law firm of Gold Bennett Cera & Sidener LLP or its successors).


1.10 "Final" means when the last of the following has occurred with respect to the Judgment: (a) the date of final affirmance on an appeal of the Judgment, the expiration of the time for a petition for or a denial of a writ of certiorari to review the Judgment and, if certiorari is granted, the date of final affirmance of the Judgment following review pursuant to that grant; or (b) the date of final dismissal of any appeal from the Judgment or the final dismissal of any proceeding on certiorari to review the Judgment and expiration of time to seek any further review or appeal of such dismissal; or (c) if no appeal is filed, the expiration date of the time for the filing or noticing of any appeal from the Judgment, i.e., thirty (30) days after entry of the Judgment; or (d) the expiration date for the time to file a motion to alter or amend the Judgment under Federal Rule of Civil Procedure 59(e) without any such motion having been filed. Any proceeding or order, or any appeal or petition for a writ of certiorari pertaining solely to any plan of allocation and/or application for attorneys' fees, costs or expenses, shall not in any way delay or preclude the Judgment from becoming Final.


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1.11 "Individual Defendants" means William G. McCabe, Gregory M. Priest, James J. Buckley, Richard Y. Okumoto, and John P. Hayes.


1.12 "Judgment" means the judgment to be rendered by the Court, substantially in the form attached hereto as Exhibit B.


1.13 "Lead Plaintiffs" means Roland King, Ann Peden, Gene Addington, Sunil Sethi, Jang Bhadhur Sethi, Naveen Seth, Sunita Uppal, Sukhdev Walia, Ed Fein, Michael Pickar, Stuart Greenebaum, Stephen Gott and Robert Elkas.


1.14 "Co-Lead Counsel" means Co-Lead Counsel appointed by the Court in the Litigation: Gold Bennett Cera & Sidener LLP and Milberg Weiss Bershad Hynes & Lerach LLP.


1.15 "Person" means an individual, corporation, limited liability corporation, professional corporation, limited liability partnership, partnership, limited partnership, association, joint stock company, estate, legal representative, trust, unincorporated association, government or any political subdivision or agency thereof, and any business or legal entity and, as applicable, their respective spouses, heirs, predecessors, successors, representatives, or assignees.


1.16 "Plan of Allocation" means a plan or formula of allocation of the Settlement Fund whereby the Settlement Fund shall be distributed to Authorized Claimants after payment of expenses of notice and administration of the settlement, Taxes and Tax Expenses (as defined in P. 2.7 below) and such attorneys' fees, costs, expenses and interest as may be awarded by the Court. Any Plan of Allocation is not part of the Stipulation and Defendants and their respective Related Persons shall have no responsibility for, interest in, or liability with respect thereto.


1.17 "Related Persons" as to Defendants means, as applicable, each of a Defendants past or present directors, officers, managers, employees, partners, members, principals, agents, underwriters, insurers, co-insurers, reinsurers, controlling shareholders, attorneys, accountants or auditors, banks or investment banks, financial advisors, consultants, associates, personal or legal representatives, predecessors, successors, parents, subsidiaries, divisions, joint ventures, assigns, spouses, heirs, related or affiliated entities, any members of their immediate families, any entity in which a Defendant has a controlling interest, or any trust of which any Defendant is the settlor or which is for the benefit of any Defendant and/or member(s) of his family.


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1.18 "Released Claims" shall collectively mean all claims (including "Unknown Claims" as defined in P. 1.24 hereof), demands, rights, liabilities and causes of action of every nature and description whatsoever, known or unknown, whether or not concealed or hidden, asserted or that might have been asserted, including, without limitation, claims for fraud or violations of any state or federal statutes, rules or regulations, by any Representative Plaintiff or Class Member in an individual or representative capacity, against the Defendants and Released Persons arising out of, based upon or related to the purchase or sale of CBT securities during the Class Period or the facts, transactions, events, occurrences, acts, disclosures, statements, omissions or failures to act which were or could have been alleged in the Litigation. Released Claims includes any and all claims arising out of, relating to, or in connection with the settlement or resolution of the Litigation. Notwithstanding the foregoing, Released Claims do not include any claims that a Class Member may have as a result of being a member of the purported class alleged in In re SmartForce PLC Securities Litigation, No. 02-CV-544-B, currently pending the U.S. District Court for the District of New Hampshire.


1.19 "Released Persons" means each and all of the Defendants and their respective Related Persons.


1.20 "Representative Plaintiffs" means each of the plaintiffs who filed a complaint in the Litigation.


1.21 "Representative Plaintiffs' Counsel" means counsel who have appeared for any of the Representative Plaintiffs in the Litigation.


1.22 "Settlement Fund" means the principal amount of Thirty-Tw
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